India's Economy: An Insider's View

Arvind Subramanian, Uday Kotak and Sajjid Chinoy

MUMBAI, December 7, 2018: Asia Society India Centre had the pleasure of hosting former Chief Economic Advisor to the Government of India (GOI), Arvind Subramanian, who was joined by Uday Kotak, Executive Vice Chairman and Managing Director of Kotak Mahindra Bank and Sajjid Chinoy, J.P. Morgan’s Chief India Economist for a discussion on Subramanian’s book ‘Of Counsel: The Challenges of the Modi-Jaitley Economy’.

Arvind opened the discussion by sharing his personal experience while formulating the tax rate for gold under the Goods and Services Tax (GST) regime and highlighting the intricacies of gold politics in India. Sajjid took it forward by asking him to share his thoughts on the current state of the Indian economy and the challenges in maintaining macroeconomic stability whilst achieving higher growth rates. Subramanian was of the opinion that despite fluctuation in oil prices, fiscal deficit and interest rates, the Indian economy had sought temporary stability. He believes that policymakers should focus on increasing agricultural growth and reforming the financial sector to tackle the ‘twin balance sheet’ issue. Further, Kotak brought attention to the crisis in the Non-Banking Financial Company (NBFC) sector and proposed recapitalisation of systemically important NBFCs in India, Subramnian also stressed the need for an Asset Quality Review (AQR) to solve rising Non-Performing Assets (NPAs) with the banking sector. ‘In pursuit of long-term macroeconomic stability, good politics is incomplete without good economics’ he later added while referring to the role of cooperative federalism in reforming India’s economy. He spoke of policies such as Universal Basic Income (UBI), which he said could alleviate the agrarian crisis in India. Lastly, while addressing the contentious demonetisation policy imposed by the government in 2016, Kotak said that while the policy had a positive effect on the financial sector, due to a rise in savings, the overall impact could have been greater if the execution strategy was planned well.

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